Endochondral ossification is a fundamental bone forming process involved in normal bone development. It is also recapitulated in pathological conditions such as bone fracture healing and osteophyte formation in osteoarthritis. The precise sources of osteoblasts responsible for trabecular bone formation during endochondral ossification remain not fully defined. Our recent genetic studies provide strong in vivo evidence in support of the hypothesis that a significant fraction of hypertrophic chondrocytes have the ability to become osteoblast lineage cells accountable for trabeculae formation in endochondral bones. Our data further suggest the additional hypothesis that during chondrocytes to osteoblasts transdifferentiation, Col10a1-expressing mature chondrocytes may first dedifferentiate to become mesenchymal progenitor cells in the bone marrow before they redifferentiate into osteoblasts. We propose to perform additional genetic experiments to further substantiate our findings and to provide evidence for the two-step hypothesis underlying the proposed transdifferentiation of mature chondrocytes into osteoblast lineage cells during development and postnatal growth. Other experiments will test the additional hypotheses that hypertrophic chondrocytes are a source of osteoblasts in fracture healing and in osteophyte formation in osteoarthritis. Our proposed experiments should lead to a revision of presently accepted concepts regarding the source of osteoblasts in endochondral bones. Our expected results should have a broad impact on the biology and pathogeny of endochondral bones.